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Premises payment changes ‘to reduce costs and workload’

Changes to the way premises payments are processed could free up GP time and reduce administrative costs, the BMA and the NHS have said. 

Two changes have been proposed to the way premises payments work: the first a pilot where commissioners will pay rent direct to NHS Property Services, cutting out the GP practice; the second, the removal of the need for a rent review agreement between a third-party landlord and the practice before bringing in a district valuer.

Guidance for this is expected to be published in the next six months. 

It follows a string of issues with premises costs, including disputes over service charges. Pulse reported in 2016 that a practice saw their fees hiked by up to 400%, while more recently a practice’s annual service charge increased from £14,000 to £48,870

Direct payments are being piloted in a number of CCGs across England, including Doncaster, since January. This occurs when a GP practice no longer receives the reimbursement, which they then pay to the NHS, but instead, the commissioner directly pays the NHS.

NHSPS told Pulse this pilot for practices in NHS-owned buildings could ‘reduce administrative costs and burden’ for GPs.

An NHSPS spokesperson said: ‘Others are expected to go live from Q3 subject to further discussions and agreement by the practices. This approach is led by NHS England and Department of Health and Social Care (DHSC) and the agreements are voluntary between the commissioner and practice.

‘The scheme has the potential to reduce administrative costs and burden for the practice and streamline funding flows through the system.’

It comes after the National Audit Office recently found that NHSPS’s approach to collecting lease fees does not work ‘effectively’, highlighting that the outstanding debts owed by tenants – including GPs – had almost tripled in five years.

At the moment, practices occupying NHS premises receive reimbursements for their rental costs after having paid NHSPS. Under the direct payments pilot, CCGs pay the NHSPS directly instead.

Mark Day, chief operating officer of CHP, which is part of DHSC and has led on the pilot, said: ‘If you’re in general practice, the benefit is that it reduces transaction costs. There’s no worries around cash flow, the money just flows directly and we think it makes them more compliant with their leases conditions as well because they never make rental payments.’

Rent review memorandums

The second change relates to practices operating in premises owned by third-party landlords, and cuts out the need for an agreement between the landlord and the practice before rent reimbursement is agreed with the NHS. 

The BMA has said the changes will reduce workload for GPs. 

Current 2013 directions say that landlords and tenants are supposed to agree their rent and sign a rent review memorandum.

In some cases, it can mean where the tenant has already agreed to a rent increase with the landlord but the district valuer says no, the practice could be left with a shortfall of rent coming in.

Paul Wade, a partner at surveying firm SHW, said the current problem is that practices have to sign this memorandum before asking for the NHS to increase or decrease the amount of rent reimbursement they receive. 

However, the new guidelines are expected to change this. 

He said: ‘There are new directions coming out in the next six months, which will hopefully rectify it and reverse the problems that the 2013 directions brought.’

Commenting on the rent review changes, BMA GP Committee chair Dr Richard Vautrey said: ‘This ruling is helpful in clarifying the correct procedures GP practices need to follow when undertaking rent reviews.

‘It was clear that the 2013 directions, including the introduction of the rent review memorandum, were causing a huge amount of extra work and risk for contractors, which is why we need to see the updated guidelines published as soon as possible.’

Last summer, NHS England opened a consultation for GPs to propose ‘solutions’ to premises problems.